HM Revenue and Customs could assist the self-employed with pension savings through the tax return system, Royal London director of policy Steve Webb has said.
Speaking at the Pensions Management Institute’s Pensions Aspects Live conference, today 19 April 2018, the former Pensions Minister emphasised that the “big disappointment” of the auto-enrolment review was the lack of consideration over pension saving for the self-employed, women and low earners.
Offering his own proposal, Webb stated that for self-employed workers or employees who are ineligible for auto-enrolment due to having multiple jobs that are below the workplace pension threshold, “HMRC is the answer”. Webb detailed that HMRC could utilise the tax return system to 'pseudo-enrol' the self-employed into pension saving by extracting a proportion of returns into a retirement income.
He also suggested that HMRC should be responsible for collaring the information of those with multiple jobs into a single record to be able to “pseudo-enrol” workers.
Also commenting on the pensions of those who leave the workforce to become full or part-time carers, Webb suggested that the industry should encourage and challenge the state to pay employer contributions of 3 per cent towards their pensions.
In addition, Webb highlighted the long-running issue of middle-to-high earning women who temporarily leave work to care for their children. It is necessary for those in this position to still claim child benefit in order to gain national insurance credit for their state pension.
It is necessary to make sure all of these women are aware of this in order to lessen the pensions pay gap and boost the pensions of many women across the country, Webb explained.
While closing the gender pay gap will have an impact on the pension pay gap, it is also up to the industry and government to also work on ensuring people can secure the best outcome in retirement, Webb added.